Will Cybersecurity Stocks Out-Perform As Geopolitical Threats Climb?
Cybersecurity stocks have notched a good run in 2025 amid a flurry of high profile hacking incidents. Also, buzz surrounding artificial intelligence is driving investor interest in cybersecurity stocks.Wall Street analysts expect corporate spending on cybersecurity to remain a priority over most other software products and services. As of June 23, the Computer Software-Security group ranked No. 13 out of 197 industry groups that IBD tracks.
Cybersecurity Stocks Advance In 2025
Among the best performing cybersecurity stocks this year has been Zscaler (ZS), which has advanced 67% in 2025 while Cloudflare (NET) has climbed 66%. In addition, Zscaler is the biggest provider of cloud-based web security gateways that inspect customers' data traffic for malware. Started in 2009, Cloudflare speeds up and provides security for web applications routed through its intelligent global network.
Artificial Intelligence Battleground
Both computer security firms and hackers are expected to make use of generative AI tools. Cybersecurity firms expect generative AI tools to help reduce the time to detect and respond to many forms of computer hacking. Also, they see generative AI automating more functions in security operations centers to help companies deal with a shortage of software engineers.
Cybersecurity Stocks: Hacking Attacks
The "Salt Typhoon" Chinese hacking incident in 2024 could drive higher spending on cybersecurity, analysts say. The attack targeted U.S. telecom companies. Also, the U.S. Treasury reported "malicious cyber activity" carried out by Chinese state-sponsored actors.
The recent hacks on UnitedHealth Group and casino operators MGM Resorts (MGM) and Caesars Entertainment (CZR) underlined worries that generative AI will increase ransomware attacks.
Cybersecurity Stocks: Identity Security
Meanwhile, research firm IDC forecasts big growth in identity security. The Identity and Access Management market will double from $23.5 billion in 2024 to $47.1 billion in 2028, according to IDC.
Growth is expected to be driven by the increasing awareness of the critical nature of identity security in organizations, said a JPMorgan report, which sees upside in privileged access management for firms such as CyberArk.
Further, Wiz, CrowdStrike and Palo Alto Networks are players in the cloud security market, which incudes Cloud Native Application Protection Platform (CNAPP) products and services.
Gartner currently estimates the CNAPP market will be $7 billion in 2024, and will grow at an annual compound rate of 25% $17.1 billion in 2028.
Microsoft Competition Growing Threat
The cybersecurity stocks have thrived despite growing competition from cloud computing giant Microsoft. Microsoft aims to integrate artificial intelligence tools into its security platform. Called Microsoft Security Copilot, the platform uses a new AI assistant.
If regulators approve Alphabet's purchase of Wiz, Google will be a bigger rival to cybersecurity incumbents, much like Microsoft.
Cybersecurity Stocks Advance In 2025
Among the best performing cybersecurity stocks this year has been Zscaler (ZS), which has advanced 67% in 2025 while Cloudflare (NET) has climbed 66%. In addition, Zscaler is the biggest provider of cloud-based web security gateways that inspect customers' data traffic for malware. Started in 2009, Cloudflare speeds up and provides security for web applications routed through its intelligent global network.
Artificial Intelligence Battleground
Both computer security firms and hackers are expected to make use of generative AI tools. Cybersecurity firms expect generative AI tools to help reduce the time to detect and respond to many forms of computer hacking. Also, they see generative AI automating more functions in security operations centers to help companies deal with a shortage of software engineers.
Cybersecurity Stocks: Hacking Attacks
The "Salt Typhoon" Chinese hacking incident in 2024 could drive higher spending on cybersecurity, analysts say. The attack targeted U.S. telecom companies. Also, the U.S. Treasury reported "malicious cyber activity" carried out by Chinese state-sponsored actors.
The recent hacks on UnitedHealth Group and casino operators MGM Resorts (MGM) and Caesars Entertainment (CZR) underlined worries that generative AI will increase ransomware attacks.
Cybersecurity Stocks: Identity Security
Meanwhile, research firm IDC forecasts big growth in identity security. The Identity and Access Management market will double from $23.5 billion in 2024 to $47.1 billion in 2028, according to IDC.
Growth is expected to be driven by the increasing awareness of the critical nature of identity security in organizations, said a JPMorgan report, which sees upside in privileged access management for firms such as CyberArk.
Further, Wiz, CrowdStrike and Palo Alto Networks are players in the cloud security market, which incudes Cloud Native Application Protection Platform (CNAPP) products and services.
Gartner currently estimates the CNAPP market will be $7 billion in 2024, and will grow at an annual compound rate of 25% $17.1 billion in 2028.
Microsoft Competition Growing Threat
The cybersecurity stocks have thrived despite growing competition from cloud computing giant Microsoft. Microsoft aims to integrate artificial intelligence tools into its security platform. Called Microsoft Security Copilot, the platform uses a new AI assistant.
If regulators approve Alphabet's purchase of Wiz, Google will be a bigger rival to cybersecurity incumbents, much like Microsoft.
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